IT key to making business fizz at drinks giant

Franz: This is a company about brands, marketing and sales, so IT as a team has to enjoy that

Diageo chief information officer (CIO) Brian Franz faces a familiar challenge to many of his peers today ­ how to lead a technology transformation while delivering on IT’s contribution to a £100m annual savings target for the company.

Franz joined the drinks giant from PepsiCo 15 months ago (see below) with a remit to resume the IT overhaul started with a group-wide SAP rollout, initiated a couple of years earlier by predecessor Robin Dargue -­ now CIO at Royal Mail.

The new phase of the programme will see the company using technology to boost its commercial capability, streamline processes and reduce costs to help meet that £100m target.

“What I found was a business that had been sweating its assets, focusing heavily on creating a single SAP platform and was yearning to get value out of what it was doing and use that in a way that was evident in the business front-end,” Franz told Computing.

“Given the team was narrowly focused around those deliverables, the first thing to do was to have IT work transitioned to a more commercially focused set of programmes, and to invest and deliver value in sales, marketing and the supply chain.”

Despite employing 400 IT staff worldwide in areas such as architecture and project management, Diageo outsources a lot of its IT work and a shift in vendor management was also needed.

According to Franz, the firm’s outsourcing partners lacked full understanding of some business processes as well as skills in highly technical areas of application development, so Diageo began to instil a “healthy tension” between suppliers.

“We needed to make sure that each partner had the right competitive process to give us the best solution in terms of price, value and timeframe, and that wasn’t always present,” said Franz.

“The world economic situation was also changing, so it was time to shift from focusing on large-scale projects to right-sizing solutions and making sure we were implementing something that was adequate to our different businesses. That wasn’t the focus of many of our partners before.”

Despite the drive to reduce cost, Diageo has maintained its investment programme, which includes projects that will provide a short-term payback, such as the implementation of handheld devices for sales staff in Africa and supply chain enhancements in the UK and US.

“Even before the restructuring was announced, I was already thinking of what we would change in the cost structure in IT back in October last year. We already had a multi-year roadmap but the economy was deteriorating, so we started re-framing the plan around short-term projects to drive value and have a real impact,” said Franz.

Projects in the UK will include the rollout of business planning tools using an SAP customer relationship management system, and product lifecycle management systems, both forecast to complete by mid-2010.

Digital marketing campaigns are another top priority, with projects to promote the Smirnoff vodka brand through streaming of live events over the web and use of other social networking tools, due to go live in September.

“This is a company about brands, marketing and sales, so IT as a team has to enjoy that. One of the first things our chief executive said to me was that marketing in a digital space is one of the most important things for us and is the main area where we spend our marketing budget,” said Franz.

“As a CIO, you have to execute because that gives you credibility, but you have to sell what you are doing. If you don’t have those skills, then you will lose out.”

Career path – Brian Franz, CIO, Diageo

Brian Franz joined Diageo in March 2007 from PepsiCo International, where he
served as a senior vice president and CIO. Previously, he worked at General
Electric, AT&T and Readers Digest, and had a stint in private equity.

“I am lucky enough to have been involved with sectors such as finance,
manufacturing and done a lot of integration and mergers and acquisitions,”
said Franz.

“Diageo needed a CIO who could use its IT assets and drive commercial
value and my background lends itself to that – that kind of view and experience in different things represented the difference and transition in leadership they wanted to inject.”

Despite having a wide agenda and targets to be met, Franz believes a commercial
mindset will help take Diageo’s IT to a higher level.

“It’s a different phase of the transformation. Before, it was about building
the core foundations and now it is about bringing it to life. It’s not an easy
shift but we have been progressing quite significantly,” he said.